Going to an open house.. time to panic?

Question

Hey everyone

Over the last 6 months i've been analyzing deals, listening to as much content as possible, and got pre approved for a good amount to borrow for my area.

I found a property in my area that is in good condition, 4 units, and will cash flow nicely

I am going to the open house this weekend, and I had the thought...

"Oh no, am I actually equipped to be a landlord"

The property is already under property management, and the listing agent stated they are eager to continue managing the property so thats nice.

I guess I'm suddenly nervous as things get more real about things that I don't yet know.

- Umbrella insurance/versus LLC for protection and when do I start gathering that info, would it only be when an offer is accepted or is it possible to get quotes before for assessing the deal?

- Questions to ask at the open house

- What to look for in terms of anything that might need to be repaired

- There's already tenants there, what should I ask about that? Current leases etc

- Should I consider finding out who the property management company is and trying to reach out to them prior?

Thanks in advance for any input!

David M. · Answer

@Joe Curley

This might be helpful in your decision regarding LLC's:  https://www.biggerpockets.com/...

I'm part of the group that doesn't necessarily believe you need a LLC to invest in residential properties.  You'd want to know how you want to start out, and potentially readjust if you like doing this.  When you put in your offer, just make the buyer as "Joe Curley or and entity to be formed" so that you can create the LLC after your offer is accepted.  Not much point doing it sooner.

If you use an attorney, (s)he should help you with doing the tenant transfer correctly.  That includes executing Right of Estoppel to get all the lease info.  Make sure you arrange to have the security deposits transferred, and you confirm with the tenants the amount of the security deposit.

Are you planning on use the pm company?  What is your plan for handling the renting aspects?

So, it sounds like you don't have your own realtor.. hmm... is that your own choice?

Generally, Open Houses aren't the best time to be super inquisitive.  Its more for the agents to pick up clients.  With traffic from others wanting to see the property, it can make it difficult to really find out about the property.  As for questions to ask while at the Open House, that's a pretty open ended question.  I guess you might start with if the agent hosting the Open House (who isn't necessarily the listing agent) has a seller's disclosure...

Good luck.

Joe Curley · Answer

Thanks this was helpful.

Michael Dumler · Answer

@Joe Curley if you decide to put in an offer after the open house make sure to include stipulations addressing for rent rolls and leases to be provide during due diligence. You will want to confirm if the tenants have been paying on time and if their lease is month-to-month or fixed. As far as determining what may or may not need to be repaired, generally speaking, this is done during due diligence if you get the property under contract. Lastly, I would still interview and set up a call with the current property management. Just because they have been managing the property for a while does not necessarily mean they are reliable. Congratulations on taking actionable steps towards real estate investing. Hope this helps!

Bob Okenwa · Answer

@Joe Curley

Glad to help!

Joe Curley · Answer

Thanks so much for the response!

Bob Okenwa · Answer

@Joe Curley

Congrats on going out and taking action. The fear you are experiencing is simply being unsure of the outcome of an event, which is normal. Don't let it consume you or dissuade you from your plan. Always remember what you're in it for and keep that motivation at the forefront of your mind.

1. Umbrella insurance should be more than enough, especially for a new investor. You can speak with an attorney or insurance agent for more info about what is best for you.

2. I don't know what you don't know so it's kind of hard to answer. You should be asking your agent this if you have one. If not, get one ASAP. Or use the search feature here or go to Google and search "biggerpockets: questions to ask at open house"

3. Once again, your agent can help with this. But you're going to want to know at the very least the lease basics such as length and rent amount and if the rents are current.

4. Yes, call the PM and see if there's anything they can tell you about that property and that you're considering using them and would like to interview them in general about their policies and management style, etc.